Americans said last month that access to credit is at its most difficult level in nearly a decade, as they prepare for higher levels of inflation in the coming years, said a report from the New Federal Reserve (Fed). York posted yesterday.
In the March Consumer Expectations Survey, the entity found that the proportion of households that indicate that credit is more difficult to obtain compared to a year ago rose to the highest level up to 58.2%, the highest since 2014 .
The report indicated that “respondents were more pessimistic about the availability of credit in the future, with the proportion of households expecting it to be more difficult to obtain credit a year from now also rising.”
Meanwhile, households expect inflation within a year to be at 4.7%, compared to 4.2% in February. This is the first increase in inflation expected within a year since October. At three years, inflation would stand at 2.8% compared to 2.7% the previous month, while at five years those surveyed expect inflation of 2.5% compared to 2.6% the previous month.
Despite expectations of higher inflation in the short term, survey participants forecast a decline in gasoline, food and rental prices, as well as a 1.8% rise in housing prices.
Rising inflation expectations could pose a new challenge to the Fed’s efforts to reduce inflation.
Over the past year, the Fed has waged a very aggressive campaign to reduce inflation, currently at 5%, down to 2%, and signs that it is starting to cool have opened the door for an end to the rate hike cycle.
The Fed’s rate hikes are aimed at making credit more expensive, so it’s not surprising that households are reporting problems getting loans.
Although the Fed report does not mention the situation, the survey was produced in a month when the financial system was rocked by the failure of Silicon Valley Bank and the problems of other financial institutions, prompting the Fed to lend significant amounts of money to the banking community.
The monetary authorities consider that the banking system is sound and that the trouble spots are isolated.
rate hike
For his part, the president of the New York Fed, John Williams, assured that the problems in the financial system that led the central bank to grant large amounts of credit to banks are not collateral damage from the aggressive effort to reduce inflation.
“Personally, I don’t think the pace of rate increases is behind the two bank failures in March,” Williams said at an event held at New York University.
